2. Chenoa 2nd behind an FHA 1st soft or amortized 2nd
Issued in conjunction with a FHA 1st TD loan
CONFORMING OR HIGH BALANCE
1 or 2 Units allowed – FHA loan limits apply
3.5% Soft Second, or Amortized Second
No Borrower Investment Required (with Seller or 3rd party paid Closing Costs)
Borrower Paid Comp – max Broker charge is 2.25%; must meet 3% points and fees test. We will advise at submission, as this could change based on loan amount, and fees charged if your loan meets the 3% point and fee test.

3. Advantages No borrower investment required Conforming or High Balance
No FTHB restriction -No Sale Price Limits- No Homebuyer Class Required
FICO Scores down to 620 – see FICO hits on rate sheet.
2 units 640 fico 50% Ratio if FTHB
Non-occupant co-borrowers OK on 1 unit only – income not used toward AMI %
Income on 2nd unit not counted toward AMI limits; can be used to qualify at 75%
Income >115% AMI OK - requires amortized 2nd
Income up to or = 115% AMI – soft 2nd with no payments
Only Qualifying Income used for AMI calculations
DTI per AUS – required DU approval. 2 units max 50% ratio if FTHB11/17/2017

4. PROGRAM LOCKING & Program fees borrower paid only
PROGRAM LOCKING & Program fees borrower paid only These fees affect the 3% point and fees test.
Loan must be locked by 1:00 PM, PST
All PTD’s must be cleared before locking.
$1095 to Essex
Up to 2.25% Broker fee - (unless loan does not meet 3% points and fees test.
Program hits, i.e. FICO score and loan amount hits also go toward points and fees.
Can have a Contract Processing Fee max $1125 must be approved with Essex, ask how

5. Program codes FHA 1ST: 2ND Program Codes Code 3030CH
Soft 2nd : 4030CHZ
Fully Amortized 30 year 5% rate:
4030CHFR
Full amortized 10 year 0% rate:
403CHZR

6. Chenoa Fund FHA Overlays
Lends in CA, Nevada, Utah, Idaho, Florida, Texas (all states where Essex is lending)
1-2 unit property only (no 3-4 units) (FHA loan limits for the 2nd unit okay.)
2 Units 640 and max ratio 50% for FTHB
SFR, PUD, Townhome, Condo, Attached, Detached
No Manufactured Homes
FICO Score 620 or higher – see price hits on rate sheet

7. Chenoa Fund Soft Second
Qualifying Income <=115% AMI - see calculation
0% Interest Rate and 30-year Term
No Payment
Forgiven after 36 consecutive on-time payments on FHA 1st Mortgage. If 1st is paid off in less than 36 payments, the 2nd will require to be repaid
Section H of Declarations on 1003 must indicate down payment borrowed, show subordinate 2nd on 1003

8. Chenoa Fund amortized Second
Qualifying Income > 115% AMI (meaning no income limit )
10-Year term 0% interest rate; or
30-Year term 5% interest rate
Requires monthly payment if you chose
Payment must be included in housing ratio
Section H of Declarations of 1003 must indicate down payment borrowed, show subordinate 2nd on 1003

9. Secondary Financing on 1003

10. Declarations page of 1003

11. Secondary Financing –DO/DU
Page 2-Types, Terms, & Property
Page 7-Transaction Details

12. Secondary Financing LP

13. Calculating Area Median Income
Go to the HUD Area Median Income Site. This can be found online at:
Select the MOST RECENT fiscal year

14. Select the state, select the county, click the button “View County Calculations”

15. Always use 4 persons FOR 1-4 Family, over 4 see next page,
Always use 4 persons FOR 1-4 Family, over 4 see next page,. this is to get the SOFT 2nd
The generic median income number is located on the left-hand side of the results screen under the column heading ‘Median Income’. This result multiplied by 115% is what should be used in most cases.
66,200 X 115% = 76,130 IMPORTANT! 1 to 4 people once over 4 see next page
FAMILY SIZE TAKEN FROM The minimum starts at 4 persons family, ie., family of 2 can use 4 family income.

16. Always begin at 1-4 people living in the house,  2 people always use 4, 3 people always use 4.. you get the idea, that’s why 4 is in bold as you begin there J
LOS ANGELES COUNTY here are sample income limits, LA County at min the income limit is 103,615 for 1 to 4 people in household
The 1-4 person household very low income is $45,050 x 2= $90,100 and if you multiply that number by 115% the result is $103,615 for a household of 1-4 persons.
The 6 person household very low income is $52,300 x 2 = $104,600 and if you multiply that number by 115% the result is $120,290 for a household of 6 persons.
The 8 person household very low income is $59,500 x 2 = $119,000 and if you multiply that number by 115% the result is $136,850 for a household of 8 persons

17. Next Steps…
Process your loan file as usual (upload 1st& 2nd – 2 loan numbers)
1st: FHA guidelines (okay to use FHA submission sheet); submit complete file.
2nd : Submit 1003 with loan amount of 2nd – and submission sheet (nothing else)
Advise of both loan numbers when uploaded.
We approve – We fund!

18. Underwriting… FHA Guidelines TRID compliance
Industry Standards (example 4506-T (W-2 only ok)
LOE for Employment Gaps 30 Days or More

19. CD disclosing must follow TRID
Closing Disclosure
CD disclosing must follow TRID
Initial CD must be issued 3 days prior to funding just like the first mortgage and is sent with the final CD and closing documents